The cross-price elasticity of demand for peanut butter with respect to the price of jelly is -0.3. If we expect the price of jelly to decline by 15%, what is the expected change in the quantity demanded for peanut butter?
Correct!
+4.5%
-4.5%
+15%
+45%
+45%
You might also like to view...
A drop in consumption or investment spending caused by increased government spending is referred to as:
a. the multiplier effect. b. an expansionary gap. c. Ricardian equivalence. d. the paradox of thrift. e. crowding out.
One of the 20th century's worst episodes of inflation occurred in
a. the United States in the 1960s. b. Italy in the 1950s. c. Russia in the 1930s. d. Germany in the 1920s.
The principle of comparative advantage suggests that governments should pursue free trade because it ______.
a. equitably distributes human capital worldwide b. enables countries to grow their economies through specialization c. prevents poor countries from pursuing technological advances d. reduces pressure on the economies of countries that have few natural resources
People tend to hold more money as the rate of inflation ___ and as the level of income ____.
A. rises; rises B. falls; falls C. rises; falls D. falls; rises